BDC’s chief economist weighs in on new evidence that business owners take environmental protection seriously—and shares some good news about the B.C. economy
Canadian business owners believe shrinking their environmental footprint is the right thing to do, even if they have to pay the tab.
That’s one of the key findings in a new national study by Business Development Bank of Canada (BDC). For A Transformation in Progress: How Canadian Entrepreneurs Are Taking on the Environmental Challenge, BDC polled some 1,500 business owners and decision makers. The survey, focused on small and medium-sized companies, took place last October.
“Maybe the most interesting thing is that the vast majority, 84 percent, believe that it is their own responsibility to take action to protect the environment,” says Pierre Cléroux, BDC’s Montreal-based vice-president, research, and chief economist. This number shows that entrepreneurs are like other people, Cléroux notes. “We forget sometimes that yes, they have a business, but also they are citizens,” he says. “They take responsibility for their actions, and it is their personal convictions that really make a difference.”
As a group, the survey respondents face little pressure from consumers to go green, Cléroux observes. “We were a bit surprised,” he says. For some, a desire to reduce operating costs and the potential to improve their brand image figured in the decision. “But the No. 1 reason is just because personally, they believe it’s important to reduce the impact of their business on the environment.”
At the same time, Cleroux notes, 82 percent of respondents are taking concrete action on that front. Roughly half said that environmentally responsible measures are part of their company’s mission statement. Respondents are worried about climate change, too: more than four out of 10 said they feared it would negatively affect them over the next decade.
Rather than pass the cost of their green transition on to consumers, 41 percent of those polled said they’re swallowing that expense. That squares with BDC research showing that just 34 percent of Canadian consumers weigh the environmental impact of purchasing decisions, while 60 percent say price is the most important factor.
“Everybody’s pro-environment, but they’re not willing to pay more for that,” Cléroux says. “So [entrepreneurs] have to absorb the costs of their actions.”
I want to go green. Where do I start?
Asked about the impact of the pandemic on entrepreneurs’ green commitments, Cléroux says BDC had planned to release a similar study a year ago but shelved it because of COVID. The numbers in the new survey didn’t move much, he explains. “Overall, the results are very similar, so their conviction has not changed because of the pandemic,” he says.
COVID’s third wave makes it tough to predict when the crisis will end, Cléroux admits. “But in a few months, we should be in much better shape, and I think this topic is going to come back very strongly. I think that’s going to be one of the main issues in the next few years.”
When it comes to adopting green business practices, the pandemic and lack of financial resources are the main barriers, respondents said. Another big obstacle that BDC has noticed in its research: not knowing where to start.
To help with the latter problem, the report includes an evaluation that businesses can use to compare their environmental profile with that of survey respondents. It also offers next steps for a company that rates itself as a beginner, in transition or a leader.
BDC is very open to supporting organizations that want make a difference, Cléroux stresses. “We can help entrepreneurs with their green projects because that’s a priority for us,” he says. Such efforts could range from using less energy or water to shifting to so-called circular production, which builds recycling into a product’s life cycle. “We have different tools to help companies to be able to achieve that, on the advisory service side or on the financing side.”
We just put the economy on pause
As this province grapples with surging COVID cases, Cléroux has some good news. “The level of jobs in the B.C. economy is 98 percent what it was before the pandemic,” he says, noting that this performance exceeds the national average of 96 percent. “So a lot of the sectors in B.C. are back to the pre-crisis level.”
Of course, the exceptions are industries with COVID-related restrictions, such as hospitality and tourism. But Cléroux points out that B.C. manufacturing jobs are now at 106 percent of their pre-pandemic levels. The main reason: demand for lumber. “Housing markets in North America have been performing very well over the last year, even during the recession,” Cléroux says. “So B.C. manufacturing is benefiting from that. Food processing is also performing very well.”
The pandemic’s third wave will slow down the recovery in B.C., Ontario and Quebec, the three biggest provinces with restrictions, Cléroux says. Returning to some kind of normal hinges on vaccinations—as shown by the U.S., where economic activity is rebounding now that 50 percent of Americans have gotten a first dose. Canada lags well behind at just 18 percent, Cléroux says. “But we believe that at the end the summer, most Canadians will be vaccinated, and the economy will really rebound.”
Because it’s self-imposed, the COVID recession is very different from the 2008-09 global financial crisis and other previous downturns, Cléroux adds. “We just put the economy on pause,” he says. “What we learned in 2020 is that sectors where you lift the restrictions, these sectors are coming back very quickly.”